'Imperialism': Where Lenin Went Wrong

A hundred years ago last month Lenin's pamphlet 'Imperialism, The Highest Stage of Capitalism' was published. We take another look at its defects.

In his introduction Lenin wrote that the pamphlet was based on the views of the English non-Marxist writer JA Hobson in his book Imperialism (1902) and those of the Austrian Social Democrat Rudolf Hilferding in his Finance Capital (1910). Hilferding, basing himself mainly on German experience, described how banks, through what would now be called their investment banking side, had come to merge with industrial capital, raising capital for them and not only charging for this but retaining a share for themselves. Hobson, who was an underconsumptionist, argued that what had led to imperialism, as investment and territorial expansion abroad, was a surplus of capital that could not find a profitable outlet in the home country.

Lenin combined these views to come up with a definition of imperialism as 'the monopoly stage of capitalism' where 'finance capital' as the 'bank capital of a very few big monopolist banks' had 'merged with the capital of the monopolist combines of industrialists'. Accepting Hobson's surplus capital theory, Lenin said that 'monopoly capitalism' led to the formation of 'international monopolist capitalist combines which share the world amongst themselves' and to the 'territorial division of the whole world among the biggest capitalist powers'.

This was a passable description of some aspects of capitalism at the time, especially in Germany, and Lenin's was correct in seeing the First World War as a war over the division of the world amongst the biggest capitalist powers. On the other hand, his acceptance of Hobson's theory of surplus capital as an explanation for the 'export of capital'. ie overseas investment, was dubious. A more straightforward explanation for the capital being invested abroad would be that it was more profitable to invest it there rather than at home.

Lenin was also mistaken to see the German-style merger of bank and industrial capital as 'the highest stage of capitalism'. It was a common view amongst the Social Democratic parties at the time that capitalist competition would lead to monopoly and that what socialists had to do was to take these into common ownership and re-orient production to satisfying people's needs rather than for profit. Karl Kautsky had speculated that the process of monopolisation could lead to a single world trust and a non-aggression arrangement between the imperialist powers, which he called 'ultra-imperialism'. Lenin had a point when he said that this was impossible as the powers would never agree on a permanent carve-up of the world but would seek to change this as their respective strengths changed. But he failed to see that this applied to 'monopolies' in his 'imperialist' countries. The capitalist class there was not a monolithic bloc but different sections had different interests and none wanted to be held to ransom by some monopoly. Hence 'trust-busting' legislation in the US and nationalisation and the threat of nationalisation in Britain.

True to his polemical style, Lenin attributed a motive to Kautsky, accusing him of advocating a peaceful, united world capitalism even though Kautsky had only envisaged 'ultra-imperialism' as a theoretical possibility. Lenin posited a link between the 'opportunism' of which he accused Kautsky and 'imperialism', arguing that the reformism of the Social Democratic and Labour parties of Europe was due to the 'imperialist' powers using a part of their 'high monopoly profits' to bribe 'certain sections of the workers' into supporting both reformism and the state in which they lived. After the Bolshevik coup d'etat this was developed into a full-blown theory that the top layer of workers in the countries with colonies had been bribed to support capitalism out of the super-profits of colonial exploitation and that the independence of colonial territories would undermine this, with the result that, deprived of their share of the super-profits, the workers there would abandon reformism and become revolutionary.

This was mistaken on a number of counts. First, it goes against the Marxian theory of wages that wages are the price of what workers sell and that higher wages reflect higher training and skills, not any share of surplus value as Lenin implied. Second, it led to supporting the creation of new capitalist states to the benefit of a local capitalist class. Third, it assumes that workers would become less reformist if their standard of living fell.

Lenin himself mentioned an objection, which he attributed to the anti-war Menshevik Martov, that the situation for socialists would be pretty hopeless 'if it were precisely the best paid workers who were inclined towards opportunism', e.g. skilled engineering workers. Lenin's reply was, typically, to accuse Martov too of defending opportunism and reformism.

If the Bolsheviks had not retained power in Russia this work would have remained an obscure, dated pamphlet. However, due to Lenin's position and later quasi-deification, it became inflated into a serious work of research and theory. The result was that its mistaken ideas – especially about some workers sharing in colonial exploitation and that socialists should support the 'anti-imperialism' of rising capitalist classes – became more widely accepted than they otherwise would have.